KosakuNarioka

A key gauge of the dollar’s strength rose Monday for a fifth straight session as comments from several Federal Reserve officials suggested the central bank could raise interest rates more quickly than investors had expected.

The ICE U.S. Dollar index
DXY, -0.31%
which measures the greenback’s strength against a basket of six rivals, was up 0.3% to 94.1550. In theory, higher interest rates would support the dollar by increasing the return on dollar-denominated assets, making them more attractive to investors.

Investors pushed the greenback higher on Friday, even as official data showed jobs growth in the U.S. fell to its weakest level since September last month. Market strategists said a reading on wage growth boded well for inflation pressures in the U.S. One of the Fed’s chief responsibilities is to maintain stable prices, and it maintains a target annual inflation rate of just below 2% to this end.

Monday's theme in the currency market was the potential for “a less dovish Fed,” said John Doyle, director of markets at Tempus Inc.

That sentiment was driven in large part by remarks from New York Fed President William Dudley, made Friday afternoon New York Time, that the Fed raising interest rates twice this year remained a “reasonable expectation.”

Dudley is a voting member of the Fed’s policy committee and is someone markets pay close attention to as he is seen as a close ally of Fed Chairwoman Janet Yellen. A series of projections for the course of rate hikes released in March showed a majority of Fed officials expected two hikes in 2016.

Chicago Fed President Charles Evans pointed to rising labor-market participation as a sign that the U.S. economy is on track for 2.5% gross domestic product growth in 2016. Though Evans’ comments carried less weight because he’s not a voting member of the Fed’s interest-rate setting committee this year.

Neel Kashkari, who also isn’t a voter this year, said whether the Fed raises interest rates in June is irrelevant, but that he supports the current policy regimen.

Among the factors supporting the greenback’s rise Monday were the Fed’s generally hawkish tone along with a round of bargain hunting that typically occurs when the dollar sees a sustained drop, Doyle said.

The dollar
USDJPY, -0.13%
rose to ¥108.46 late Monday in New York, up from ¥107.12 late Friday in New York.

The euro
EURUSD, +0.3257%
fell to $1.1389 late Monday, compared with $1.1406 at the end of last week. The British pound
GBPUSD, +0.1582%
was at $1.4411 late Monday, down from $1.4446 late Friday.

Still, many strategists are skeptical that the Fed would move to raise rates for the second time in 10 years at its coming meeting in June.

“We do not expect the Fed to pull the hike trigger at the June meeting [and] we believe that the dollar’s forthcoming direction is likely to remain sensitive to incoming data as investors try to gauge the timing of the next [Fed] move,” said Charalambos Pissouros, senior analyst at IronFX Global Limited.

Meanwhile, the euro’s weakness on Monday was driven in part by dovish comments from European Central Bank Vice President Vítor Constâncio.

The ECB still has policy tools it can use to bring inflation back to its near 2% target, Constâncio said. However, the central bank needed to allow more time for its latest round of stimulus, unveiled in March, to take hold—suggesting that it is unlikely the central bank would move to add more in the near future. Eurozone data was mildly supportive of the euro, showing German factory orders rebounded in March from the previous month.

The dollar has weakened against both the euro and yen so far this year, which investors and market strategists have widely attributed to the Fed dialing back expectations for the pace of interest rate hikes. The central bank raised its benchmark interest rate in December after keeping it just above zero for seven years.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.